Exemption for defence supplies through BEML extends to vendors and ancillary units, not only job workers.

Exemption under Notification No. 63/95-C.E. was available for goods supplied through BEML for Ministry of Defence use, because Board circulars clarified that the benefit extended beyond job workers to vendors and ancillary units supplying inputs for such manufacture. Since the appellant's goods were admittedly supplied to BEML and onward for the intended defence use, the exemption could not be denied merely because the appellant was not a job worker. The denial of exemption was therefore unsustainable.

---

---

Issues: Whether exemption under Notification No. 63/95-C.E. dated 16-3-1995 was available to the appellant for goods supplied through M/s. BEML to the Ministry of Defence.

Analysis: The Board's circulars clarified that the exemption was intended not only for job workers but also for vendors and ancillary units supplying inputs required by M/s. BEML for manufacture of finished goods supplied to the Ministry of Defence. The goods cleared by the appellant were admittedly supplied to M/s. BEML and then supplied onward for the intended defence use. As departmental circulars are binding on the revenue, the exemption could not be denied on the narrow ground that the appellant was not a job worker.

Conclusion: The appellant was entitled to the benefit of the exemption notification, and the denial of exemption was unsustainable.

---